For years, social media has been the go-to battleground for performance marketers, lured by its promise of precise targeting, measurable outcomes, and scalable reach. But a new report by Taboola, in partnership with Qualtrics, suggests that the golden age of social-driven performance marketing may be waning. Nearly 75% of performance marketers are now experiencing diminishing returns on social media ad spend, raising serious questions about its long-term viability as the dominant performance channel.
The report, The Pulse of Performance Advertising: Diminishing Returns, uncovers a fundamental challenge—marketers are spending more but not necessarily seeing proportional gains. Industry forecasts predict social media ad spend will surge to $239 billion in 2025 and $273 billion in 2026, but if ROI continues to decline, brands may start questioning these investments. The study, based on a survey of over 300 advertisers across US brands and agencies, attributes this trend to audience saturation, escalating costs, and ad fatigue, all of which are diminishing campaign effectiveness.
This is not just a budgeting concern; it’s a wake-up call for the industry. Over 80% of marketers are now deploying multiple strategies to combat these diminishing returns, with more than half expanding beyond social media to other digital channels. The shift underscores an urgent need for diversification as advertisers look for alternative platforms that provide better engagement and higher return on investment.
“While social media accounts for a large portion of performance advertising budgets, many marketers have hit a barrier in the form of diminishing returns,” said Adam Singolda, CEO of Taboola. “More spend just isn’t translating into better results. The findings in this report point to difficulty in sustaining performance over time, with marketers seeking solutions that can help them overcome that barrier.”
The key takeaway? Social media’s dominance in performance advertising is no longer guaranteed. As brands reassess their media mix, native advertising, content recommendations, and alternative platforms are gaining traction as viable solutions to counter declining social ad effectiveness. If the industry doesn’t adapt, brands may find themselves caught in a costly cycle of diminishing returns with fewer avenues for sustainable growth.